Effective contracts avoid disputes

On Behalf of | Jun 8, 2022 | Business Disputes |

A contract is the foundation of every valid business agreement. Effective arrangements create a solid foundation for a fruitful agreement between businesses, a business and its employees, a business and its vendors, a business and its clients, or with a third party. Contracts not strategically drafted to address all foreseeable areas of dispute appropriately can be more harmful than beneficial, creating costly and stressful disputes.

While it is crucial to read a contract before signing, it is also essential to have attorneys review vital new contracts to ensure that the agreement is fair and equitable. There should be no red flags that could prompt unnecessary disputes or breach of contract lawsuits. Failure to identify issues could impact the business’s bottom line. Far from causing problems, negotiating solutions to these trouble spots can strengthen the relationship or provide a clear warning before getting stuck with an unfair contract.

4 Common warning signs

The wrong contract impacts the bottom line and risks a breach of contract lawsuit. Some common red flags are:

  • The vendor or supplier will not compromise or negotiate in good faith.
  • Their contract has auto-renewals, pre-arranged price hikes or other questionable provisions.
  • The contract terms are too generous.
  • The contract is overly complicated or unnecessarily technical.

It is always best to be prepared

They say that knowledge is power. This adage is especially true when negotiating a business agreement. Negotiators who do their research to find out how the other side handles disputes, treats clients and generally conducts business will better understand their counterpart’s priorities. If everything looks positive or sticking points are negotiable, both sides can confidently sign the final agreement.